Texas Tax Revenue Totaled $2.5 Billion

State Sales Tax Revenue Totaled $2.5 Billion in February, with an additional $167 Million from March 1 Activity.

(AUSTIN) — The majority of February sales tax revenue is based on sales made in January and remitted to the agency in February. However, for this period, Texas reported and extended a week of the February 22 due date for state taxes and fees due to the winter storm’s effects to March 1.

Texas Comptroller Glenn Hegar today said state sales tax revenue totaled $2.51 billion in February. That is 13.3 percent less than in February 2020; however, after adjusting the February totals to account for March 1 activity, February sales tax revenue totaled $2.68 billion, down 7.5 percent from February 2020.

“The pattern in sales tax collections we’ve seen for the past several months continued, with receipts from the retail trade sector showing gains over the prior year while receipts from oil- and gas-related sectors show deep declines,” Hegar said. “Receipts from the service sector, as well as from restaurants and bars, also remain down significantly as many of these businesses had occupancy restrictions or were required to be shuttered during the COVID-19 pandemic.”

Sales tax collections from the mining, construction, manufacturing, wholesale trade and equipment leasing sectors continue to be depressed. Oil and gas drilling activity is tied to much of the sales in these sectors, which has picked up some since the downturn last spring but remains well below what it was a year ago.

“Receipts from online, sporting goods, furniture, and home improvement retailers continue to be elevated, a trend apparent since the start of the pandemic as Texans spend more time at home.”

After adjusting for March 1 activity, total sales tax revenue for the three months ending in February was down 4.2 percent compared to the same period a year ago. Sales tax is the largest state funding source for the state budget, accounting for 59 percent of all tax collections. The effects of the COVID-19 pandemic continued to be evident in some sources of revenue in February 2021.

Texas collected the following revenue from other significant taxes, some of which also were affected by the extension of the February 22 deadline:

• motor vehicle sales and rental taxes — $370 million, down 13.8 percent from February 2020, but after accounting for March 1 activity, total collections were $371 million, down 13.6 percent from February 2020;
• motor fuel taxes — $286 million, down 5.2 percent from February 2020;
• oil production tax — $291 million, down 21.8 percent from February 2020;
• natural gas production tax — $113 million, down 17.1 percent from February 2020, but after accounting for March 1 activity, total collections were $114 million, down 15.7 percent from February 2020;
• hotel occupancy tax — $25 million, down 51.4 percent from February 2020, but after accounting for March 1 activity, total collections were $27 million, down 46.3 percent from February 2020; and
• Alcoholic beverage taxes — $70 million, down 36.5 percent from February 2020, but after accounting for March 1 activity, total collections were $84 million, down 24.2 percent from February 2020.

For details on all monthly collections, visit the Comptroller’s Monthly State Revenue Watch. For an extensive history of tax policy developments and fees since 1972, visit our updated Sources of Revenue publication.